SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)

_X_  Quarterly  Report  under Section 13 or 15(d) of the Securities Exchange Act
     of  1934
     For the quarterly period ended September 30, 2004.
                                    ------------------

                                       or

___  Transition  Report under Section 13 or 15(d) of the Securities Exchange Act
     of  1934
     For  the  transition  period  from  _______________  to  ________________.

                          Commission File No. 0-23980
                                              -------

                       Georgia Bank Financial Corporation
                      -------------------------------------
             (Exact name of registrant as specified in its charter)

            Georgia                                      58-2005097
            -------                                      ----------
     (State of Incorporation)              (I.R.S. Employer Identification No.)

                    3530 Wheeler Road, Augusta, Georgia 30909
                 ----------------------------------------------
                    (Address of principal executive offices)

                                 (706) 738-6990
                                ---------------
                (Issuer's telephone number, including area code)

                                 Not Applicable
                                ---------------
   (Former name, former address and former fiscal year, if changed since last
                                    report)

     Check  whether  the  issuer:  (1) filed all reports required to be filed by
Section  13  or 15(d) of the Exchange Act during the past 12 months (or for such
shorter  period  that the registrant was required to file such reports), and (2)
has  been  subject to such filing requirements for the past 90 days. Yes X No
                                                                        ---  ---

     Check  whether the issuer is an accelerated filer (as defined in Rule 12b-2
of  the  Exchange  Act).  Yes   X   No
                               ---    ---

                      APPLICABLE ONLY TO CORPORATE ISSUERS

     State  the  number of shares outstanding of each of the issuer's classes of
common  equity,  as  of  the  latest  practicable  date:

     5,247,604 shares of common stock, $3.00 par value per share, outstanding as
of  September  30,  2004.


<PAGE>
<TABLE>
<CAPTION>
                               GEORGIA BANK FINANCIAL CORPORATION
                                           FORM 10-Q
                                             INDEX

Part I                                                                          Page
<S>      <C>      <C>                                                           <C>

         Item 1.  Financial Statements (Unaudited)

                  Consolidated Balance Sheets as of September 30, 2004 and
                    December 31, 2003                                              3
                  Consolidated Statements of Income for the Three and Nine
                    Months ended September 30, 2004 and 2003                       4

                  Consolidated Statements of Cash Flows for the
                    Nine Months ended September 30, 2004 and 2003
                                                                                   6

                  Notes to Consolidated Financial Statements                       8

         Item 2.  Management's Discussion and Analysis of
                  Financial Condition and Results of Operations                   11

         Item 3.  Quantitative and Qualitative Disclosures about Market Risk      24

         Item 4.  Controls and Procedures                                         24

Part II  Other    Information
         Item 1.  Legal Proceedings                                                *
         Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds     25
         Item 3.  Defaults Upon Senior Securities                                  *
         Item 4.  Submission of Matters to a Vote of Security Holders              *
         Item 5.  Other Information                                                *
         Item 6.  Exhibits and Reports on Form 8-K                                26

Signature                                                                         27
<FN>
*  No  information  submitted  under  this  caption
</TABLE>


                                        1
<PAGE>


                                     PART I
                              FINANCIAL INFORMATION


                                        2
<PAGE>
<TABLE>
<CAPTION>
                             GEORGIA BANK FINANCIAL CORPORATION AND SUBSIDIARY
                                      Consolidated Balance Sheets
                                             (Unaudited)

                                      ASSETS
                                                                   September 30,    December 31,
                                                                       2004             2003
                                                                  -------------------------------
<S>                                                               <C>              <C>
Cash and due from banks                                           $   16,320,275   $  15,704,566
Interest-bearing deposits in other banks                                 511,797          17,318
                                                                  ---------------  --------------
  Cash and cash equivalents                                           16,832,072      15,721,884

Investment securities
  Available-for-sale                                                 166,371,791     151,394,463
  Held-to-maturity, at cost (fair values of
    $4,011,982 and $5,750,099, respectively)                           3,776,525       5,437,519

Loans held for sale                                                   13,816,174      14,047,080

Loans                                                                458,446,919     418,632,111
  Less allowance for loan losses                                      (7,586,030)     (7,277,589)
                                                                  ---------------  --------------
    Loans, net                                                       450,860,889     411,354,522

Premises and equipment, net                                           18,308,807      14,250,543
Accrued interest receivable                                            3,480,150       3,784,888
Intangible assets, net                                                   139,883         139,883
Bank-owned life insurance                                             11,342,420      10,971,633
Other assets                                                           3,747,276       3,530,542
                                                                  ---------------  --------------

                                                                  $  688,675,987   $ 630,632,957
                                                                  ===============  ==============

                        LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
  Noninterest-bearing                                             $   80,614,105   $  68,033,102
  Interest-bearing:
    NOW accounts                                                      76,457,049      72,386,405
    Savings                                                          215,883,334     194,366,425
    Money management accounts                                         24,769,895      22,137,192
    Time deposits over $100,000                                      106,864,387      97,631,749
    Other time deposits                                               39,040,176      29,396,929
                                                                  ---------------  --------------
                                                                     543,628,946     483,951,802

Federal funds purchased and securities sold
  under repurchase agreements                                         40,908,605      56,968,754
Advances from Federal Home Loan Bank                                  40,000,000      30,000,000
Other borrowed funds                                                   1,000,000         800,000
Accrued interest and other liabilities                                 5,441,441       5,223,354
                                                                  ---------------  --------------
    Total liabilities                                                630,978,992     576,943,910
                                                                  ---------------  --------------

Stockholders' equity
  Common stock, $3.00 par value; 10,000,000
    shares authorized; 5,283,346 and 5,284,746 shares issued in
    2004 and 2003, respectively; 5,247,604 and 5,247,204 shares
    outstanding in 2004 and 2003, respectively                        15,850,038      15,854,238
  Additional paid-in capital                                          34,235,517      34,337,584
  Retained earnings                                                    7,439,820       3,001,079
  Treasury stock, at cost; 35,742 and 37,542 shares in
    2004 and 2003, respectively                                         (462,745)       (507,360)
  Accumulated  other comprehensive income                                634,365       1,003,506
                                                                  ---------------  --------------
    Total stockholders' equity                                        57,696,995      53,689,047
                                                                  ---------------  --------------

                                                                  $  688,675,987   $ 630,632,957
                                                                  ===============  ==============
</TABLE>


                                        3
<PAGE>
<TABLE>
<CAPTION>
                           GEORGIA BANK FINANCIAL CORPORATION AND SUBSIDIARY
                                  Consolidated Statements of Income

                                                (Unaudited)

                                                       Three Months Ended         Nine Months Ended
                                                         September 30,              September 30,
                                                    ----------  -----------  ------------  ------------
                                                       2004        2003          2004          2003
                                                    ----------  -----------  ------------  ------------
<S>                                                 <C>         <C>          <C>           <C>
Interest income:
  Loans, including fees                             $7,073,443  $6,630,320   $20,504,835   $19,375,530
  Investment securities                              1,844,988   1,487,377     5,264,296     4,669,042
  Federal funds sold                                    28,770      10,345        46,000        70,215
  Interest-bearing deposits in other banks                 497         (84)          540         3,496
                                                    ----------  -----------  ------------  ------------
    Total interest income                            8,947,698   8,127,958    25,815,671    24,118,283
                                                    ----------  -----------  ------------  ------------

Interest expense:
  Deposits                                           1,784,792   1,715,861     5,098,812     5,635,878
  Federal funds purchased and securities sold
    under repurchase agreements                        142,662     154,025       454,471       486,524
  Other borrowings                                     470,573     447,923     1,348,610     1,338,929
                                                    ----------  -----------  ------------  ------------
    Total interest expense                           2,398,027   2,317,809     6,901,893     7,461,331
                                                    ----------  -----------  ------------  ------------

    Net interest income                              6,549,671   5,810,149    18,913,778    16,656,952

Provision for loan losses                              493,103     218,833     1,013,023     1,125,388
                                                    ----------  -----------  ------------  ------------

    Net interest income after provision
      for loan losses                                6,056,568   5,591,316    17,900,755    15,531,564
                                                    ----------  -----------  ------------  ------------

Noninterest income:
  Service charges and fees on deposits               1,342,105   1,149,044     3,628,474     3,371,463
  Gain on sales of loans                             1,461,997   2,862,538     4,367,103     7,181,770
  Investment securities gains (losses), net              1,833     (73,460)       (2,709)      (44,688)
  Retail investment income                             140,281      47,954       344,819       221,343
  Trust service fees                                   147,239      97,451       405,309       247,086
  Increase in cash surrender value of
    bank-owned life insurance                          118,701     129,166       370,787       202,090
  Miscellaneous income                                 108,354      94,061       320,298       285,365
                                                    ----------  -----------  ------------  ------------
      Total noninterest income                       3,320,510   4,306,754     9,434,081    11,464,429
                                                    ----------  -----------  ------------  ------------

Noninterest expense:
  Salaries                                           2,991,389   3,838,190     8,625,169     9,830,618
  Employee benefits                                    693,087     727,505     2,190,042     2,037,439
  Occupancy expenses                                   671,950     619,152     1,933,309     1,797,155
  Other operating expenses                           1,559,252   1,556,800     4,913,877     4,300,359
                                                    ----------  -----------  ------------  ------------
      Total noninterest expense                      5,915,678   6,741,647    17,662,397    17,965,571
                                                    ----------  -----------  ------------  ------------

      Income before income taxes                     3,461,400   3,156,423     9,672,439     9,030,422

Income tax expense                                   1,139,062   1,059,793     3,187,288     3,104,631
                                                    ----------  -----------  ------------  ------------

      Net  income                                   $2,322,338  $2,096,630   $ 6,485,151   $ 5,925,791
                                                    ==========  ===========  ============  ============
</TABLE>


                                        4
<PAGE>
<TABLE>
<CAPTION>
                         GEORGIA BANK FINANCIAL CORPORATION AND SUBSIDIARY
                                 Consolidated Statements of Income

                                                (Unaudited)

                                                      Three Months Ended       Nine Months Ended
                                                         September 30,           September 30,
                                                    ----------------------  ----------------------
                                                       2004        2003        2004        2003
                                                    ----------  ----------  ----------  ----------
<S>                                                 <C>         <C>         <C>         <C>
Basic net income per share                          $     0.44  $     0.40  $     1.24  $     1.13
                                                    ==========  ==========  ==========  ==========

Diluted net income per share                        $     0.44  $     0.39  $     1.22  $     1.11
                                                    ==========  ==========  ==========  ==========

Weighted average common shares outstanding           5,248,034   5,247,204   5,247,483   5,247,204
                                                    ==========  ==========  ==========  ==========

Weighted average number of common and
  common equivalent shares outstanding               5,322,623   5,362,008   5,324,065   5,358,078
                                                    ==========  ==========  ==========  ==========
</TABLE>


                                        5
<PAGE>
<TABLE>
<CAPTION>
                            GEORGIA BANK FINANCIAL CORPORATION AND SUBSIDIARY
                                  Consolidated Statements of Cash Flows
                                               (Unaudited)

                                                                      Nine Months Ended September 30,
                                                                        2004               2003
                                                                  ----------------  -------------------
<S>                                                               <C>               <C>
Cash flows from operating activities
Net income                                                        $     6,485,151   $        5,925,791
  Adjustments to reconcile net income to net cash
    provided by operating activities
      Depreciation and amortization                                       981,038              966,699
      Provision for loan losses                                         1,013,023            1,125,388
      Net investment securities losses                                      2,709               44,688
      Net amortization of premium on investment securities                299,815              606,323
      Increase in CSV of bank owned life insurance                       (370,787)            (202,090)
      (Gain) loss on disposal of premises and equipment                    (1,385)               3,048
      Loss on the sale of other real estate                                 8,272                    -
      Gain on sales of loans                                           (4,367,103)          (7,181,770)
      Real estate loans originated for sale                          (211,143,576)        (306,272,107)
      Proceeds from sales of real estate loans                        215,741,585          314,106,182
      Decrease in accrued interest receivable                             304,738              172,403
      Decrease (increase) in other assets                                  26,858             (513,265)
      Increase in accrued interest and other liabilities                  218,087              379,028
                                                                  ----------------  -------------------
        Net cash provided by operating activities                       9,198,425            9,160,318
                                                                  ----------------  -------------------

Cash flows from investing activities
      Proceeds from sales of available-for-sale securities             24,315,495           33,318,794
      Proceeds from sales of held to maturity securities                  550,000                    -
      Proceeds from maturities of available-for-sale securities        36,910,681           50,931,903
      Proceeds from maturities of held to maturity securities           1,168,000              700,000
      Purchase of available-for-sale securities                       (76,872,338)         (90,280,661)
      Purchase of Federal Home Loan Bank stock                           (250,000)                   -
      Net increase in loans                                           (40,831,295)         (22,962,832)
      Purchase of Bank-owned life insurance                                     -           (8,000,000)
      Purchases of premises and equipment                              (5,088,112)          (1,321,234)
      Proceeds from sale of other real estate                             250,204              116,793
      Proceeds from sale of premises and equipment                         50,195               11,686
                                                                  ----------------  -------------------
        Net cash used in investing activities                         (59,797,170)         (37,485,551)
                                                                  ----------------  -------------------

Cash flows from financing activities
      Net increase in deposits                                         59,677,144           40,971,957
      Net (decrease) increase in federal funds purchased and
        securities sold under repurchase agreements                   (16,060,149)           4,688,922
      Advances from Federal Home Loan Bank                             10,000,000                    -
      Proceeds from other borrowed funds                                  200,000                    -
      Principal payments on other borrowed funds                                -             (600,000)
      Purchase of treasury stock                                          (62,042)                   -
      Payment of cash dividends                                        (2,046,410)                   -
      Proceeds from stock options exercised                                   390                    -
      Cash paid for fractional shares                                           -              (10,712)
                                                                  ----------------  -------------------
        Net cash provided by financing activities                      51,708,933           45,050,167
                                                                  ----------------  -------------------
</TABLE>


                                        6
<PAGE>
<TABLE>
<CAPTION>
                            GEORGIA BANK FINANCIAL CORPORATION AND SUBSIDIARY
                                  Consolidated Statements of Cash Flows
                                               (Unaudited)

                                                                 Nine Months Ended September 30,
                                                                     2004              2003
                                                               ----------------  -----------------
<S>                                                            <C>               <C>

        Net increase in cash and cash equivalents              $      1,110,188  $      16,724,934

Cash and cash equivalents at beginning of period                     15,721,884         17,150,691
                                                               ----------------  -----------------

Cash and cash equivalents at end of period                     $     16,832,072  $      33,875,625
                                                               ================  =================

Supplemental disclosures of cash paid during the period for:
      Interest                                                 $      7,191,021  $       7,926,597
                                                               ================  =================
      Income taxes                                             $      3,091,000  $       3,133,000
                                                               ================  =================
Supplemental information on noncash investing activities:
      Loans transferred to other real estate                   $        311,905  $         116,793
                                                               ================  =================
<FN>

See accompanying notes to consolidated financial statements.
</TABLE>


                                        7
<PAGE>
                GEORGIA BANK FINANCIAL CORPORATION AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                               September 30, 2004

Note 1  -  Basis  of  Presentation

The  accompanying  consolidated  financial  statements  include  the accounts of
Georgia Bank Financial Corporation and its wholly-owned subsidiary, Georgia Bank
&  Trust  Company  (the  "Company"  or  the  "Bank").  Significant  intercompany
transactions  and  accounts  are  eliminated  in  consolidation.

The  financial statements for the three and nine months ended September 30, 2004
and  2003  are  unaudited  and  have  been  prepared  pursuant  to the rules and
regulations  of the Securities and Exchange Commission.  Certain information and
footnote  disclosures  normally  included  in  financial  statements prepared in
accordance with accounting principles generally accepted in the United States of
America  have  been condensed or omitted pursuant to such rules and regulations.
These  consolidated  financial statements should be read in conjunction with the
audited  consolidated  financial  statements  and  footnotes  included  in  the
Company's  annual  report  on  Form  10-K  for the year ended December 31, 2003.

In  the  opinion  of management, all adjustments necessary to present fairly the
financial  position and the results of operations and cash flows for the interim
periods  have  been made. All such adjustments are of a normal recurring nature.
The results of operations for the three and nine months ended September 30, 2004
are  not  necessarily  indicative of the results of operations which the Company
may  achieve  for  the  entire  year.

Note 2  -  Recent  Accounting  Pronouncements

The  Emerging Issues Task Force on November 13, 2003 issued EITF Issue No. 03-1,
The  Meaning  of  Other-Than-Temporary Impairment and Its Application of Certain
Investments.  This  new  guidance  is  to  be  applied  in  other-than-temporary
impairment  evaluations  performed in reporting periods beginning after June 15,
2004.  Disclosures are effective in annual financial statements for fiscal years
ending  after  December  15,  2003,  for  investments  accounted  for under FASB
Statements  No.  115,  Accounting  for  Certain  Investments  in Debt and Equity
Securities,  and  No.  124,  Accounting  for  Certain  Investments  Held  by
Not-for-Profit  Organizations.  The  disclosure  requirements  for  all  other
investments are effective in annual financial statements for fiscal years ending
after  June  15, 2004.  The Company does not expect the adoption of EITF 03-1 to
have  a  significant  impact  on  its  consolidated  financial  statements.

On  March  31,  2004,  the  FASB  issued  an  Exposure  Draft titled Share-Based
Payments,  an  amendment  of  FASB  Statements  No.  123  and 95, that addresses
accounting  for  equity based compensation arrangements.  The proposed statement
would  eliminate  the  ability


                                        8
<PAGE>
to  account  for  share-based  compensation  transactions  using  APB  No.  25,
Accounting  for  Stock  Issued  to  Employees  and  replace some of the existing
requirements  under  FASB  Statement  No.  123,  Accounting  for  Stock-Based
Compensation".  The  proposed statement would require that such arrangements are
accounted  for  using  the fair-value-based method of accounting and the related
cost expensed over the corresponding service period.  It is anticipated that the
final  statement  will  be  issued  in  the  fourth  quarter  of 2004 and may be
effective  for  the  first  quarter  of  2005.  The  Company  provides  proforma
disclosures  related  to  stock-based  compensation  in  Note  4.

Note 3  -  Comprehensive  Income

Other  comprehensive income for the Company consists of net unrealized gains and
losses on investment securities. Total comprehensive income for the three months
ended  September  30,  2004  was  $4,579,465  compared to $389,130 for the three
months ended September 30, 2003.  Total comprehensive income for the nine months
ended  September  30,  2004  was  $6,116,010 compared to $4,886,731 for the nine
months  ended  September  30,  2003.

Note 4  -  Stock-based  Compensation

The Company applies Accounting Principles Board (APB) Opinion No. 25, Accounting
for Stock Issued to Employees, and related interpretations in accounting for its
stock option plans.  Accordingly compensation cost is measured as the excess, if
any, of the quoted market price of the Company's stock at the date of grant over
the  amount  an  employee  must pay to acquire the stock.  Had compensation cost
been  determined  based  upon  the  fair value of the options at the grant dates
consistent  with  the  method recommended by SFAS No. 123, on a pro forma basis,
the  Company's  net  income  and income per share, on a pro forma basis, for the
three  and  nine  months  ended  September 30, 2004 and 2003 is indicated below.

<TABLE>
<CAPTION>
                                     Three Months Ended       Nine Months Ended
                                        September 30,           September 30,
                                      2004        2003        2004        2003
                                   ----------------------  ----------------------
<S>                                <C>         <C>         <C>         <C>
Net income                         $2,322,338  $2,096,629  $6,485,151  $5,925,791
Deduct: Total stock-based
  Compensation expense determined
  Under fair value based method,
  net of related tax effect            51,969      36,534     155,907     106,164
                                   ----------  ----------  ----------  ----------
Pro Forma, net income              $2,270,369  $2,060,096  $6,329,244  $5,819,627
                                   ==========  ==========  ==========  ==========

Basic net income per share:
  As reported                      $     0.44  $     0.40  $     1.24  $     1.13
  Pro forma                        $     0.43  $     0.39  $     1.21  $     1.11

Diluted net income per share:
  As reported                      $     0.44  $     0.39  $     1.22  $     1.11
  Pro forma                        $     0.43  $     0.38  $     1.19  $     1.09
</TABLE>


                                        9
<PAGE>
Note 5  -  Cash  Dividend  Declared

On  July  22,  2004, the Company declared a quarterly cash dividend of $0.13 per
share  on  outstanding  shares.  The  dividend  was  paid  on August 11, 2004 to
shareholders  of  record  as  of  July  28,  2004.

On October 20, 2004, the Company declared a quarterly cash dividend of $0.13 per
share  on  outstanding  shares.  The dividend is payable on November 10, 2004 to
shareholders  of  record  as  of  October  27,  2004.

Note 6  -  Sale  of  Held-to-Maturity  Investment

During  the  third  quarter of 2004, the Bank sold a held-to maturity investment
upon realization that the investment was not bank qualified.  The amortized cost
of  this  security  was  $496,207  and  the  realized  gain  was  $53,793.


                                       10
<PAGE>
Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of  Operations

Overview
--------

The  Bank  was  organized by a group of local citizens and commenced business on
August 28, 1989.  It began operations with one branch.  Today, the Bank operates
seven  full  service  branches  and  one  drive  through  branch in Richmond and
Columbia  counties  in  Augusta, Martinez, and Evans, Georgia.  The seventh full
service  branch  opened in September 2004, at the Cotton Exchange, listed on the
national  register  of  historic  buildings,  in downtown Augusta, GA.  The Bank
operates  three  mortgage  origination  offices  in  Augusta, Georgia, Savannah,
Georgia,  and  Nashville,  Tennessee.  The  Savannah, Georgia office also offers
construction  lending  services.  Bank  and  mortgage  operations are located in
Augusta,  Georgia  in  two operations campuses located in close proximity to the
main  office  in  Augusta,  Georgia.   Trust  and retail investment services are
located  in  the  main  office.  The Bank is Augusta's largest community banking
company.

Richmond  and  Columbia  counties  have a diversified economy based primarily on
government,  transportation,  public  utilities, health care, manufacturing, and
wholesale and retail trade. Augusta is one of the leading medical centers in the
Southeast.  The  2002  population  of  the  Augusta-Richmond  County,  GA-SC
metropolitan  area  was  337,032,  the  second  largest  in  Georgia.

The  Bank's  services  include  lending,  residential and commercial real estate
loans,  construction  and  development loans, and commercial and consumer loans.
The  Bank  also  offers  a  variety  of  deposit  programs,  including
noninterest-bearing  demand,  interest  checking, money management, savings, and
time  deposits.  On a combined basis in Richmond and Columbia counties, the Bank
had  16.8%  of all deposits and was the second largest depository institution at
June  30,  2004,  as  cited  from  the  Federal  Deposit Insurance Corporation's
website.  Securities  sold  under  repurchase  agreements  are  also  offered.
Additional services include trust, retail investment, and mortgage.  As a matter
of practice, most mortgage loans are sold in the secondary market; however, some
mortgage  loans are placed in the portfolio based on marketing and balance sheet
considerations.  The  Bank  continues  to  concentrate  on increasing its market
share through various new deposit and loan products and other financial services
and by focusing on the customer relationship management philosophy.  The Bank is
committed  to  building  life-long  relationships with its customers, employees,
shareholders,  and  the  communities  it  serves.

The  Bank's  primary  source of income is from its lending activities.  In 2003,
the Bank's second largest source of income was from gain on sale of loans in the
secondary  market.  As  mortgage  interest  rates began to rise during the first
quarter  of  2004,  this  source  of  income  has  decreased,  while loan income
increased  due  to  higher loan volume.  The Bank also generates income from its
investment  activities  and  service  charges  and  fees  on deposits.  The Bank
continues  to  concentrate  on  increasing  trust  service  fees.  Other


                                       11
<PAGE>
significant  contributors  to  income  include  retail  investment  income  and
increases  in  cash  surrender  value  of  bank-owned  life  insurance.

The  Bank  has experienced steady growth.  Over the past five years, assets grew
from $342.1 million at December 31, 1999 to $630.6 million at December 31, 2003.
At  September  30, 2004, assets were $688.7 million.  From year end 1999 to year
end 2003, loans increased $193.6 million, and deposits increased $200.8 million.
From  December 31, 2003 to September 30, 2004, loans increased $39.6 million and
deposits  increased  $59.7  million.  Also, from 1999 to 2003, return on average
equity  increased  from  13.48% to 15.62% and return on average assets increased
from  1.21% to 1.31%.  At September 30, 2004, return on average assets was 1.30%
and return on average equity was 15.61%.  Net income for the year ended 1999 was
$4.0  million  compared  to  net  income  of $7.9 million at year end 2003.  Net
income  for  the  nine  months  ended  September 30, 2004 was $6.5 million.  The
Company  has  reached  a  level  of  maturity  evidenced  by long-term financial
performance  and  stability that resulted in the January 23, 2004 declaration of
its  first  quarterly  cash dividend of $0.13 per share.  Subsequently, on April
15,  2004,  July  21,  2004,  and  October  20,  2004  the Company declared cash
dividends  of  $0.13  per  share.

The  Bank meets its liquidity needs by managing cash and due from banks, federal
funds  purchased  and  sold,  maturity  of  investment securities, paydowns from
mortgage-backed  securities,  and  draws  on  lines  of  credit.  Additionally,
liquidity  can  be managed through structuring deposit and loan maturities.  The
Bank  funds loan and investment growth with core deposits, securities sold under
repurchase  agreements  and  wholesale borrowings.  During inflationary periods,
interest  rates  generally  increase.  When  interest  rates rise, variable rate
loans  and  investments  produce  higher  earnings,  however,  deposit and other
borrowings interest expense and operating expenses also rise.  The Bank monitors
its  interest  rate  risk  in  a  200  basis points (2%) annual ramp up and down
scenario  and  a  200  (2%)  basis points shock up and down scenario.   The Bank
monitors  operating  expenses  through  responsibility  center  budgeting.

Forward-Looking  Statements
---------------------------

Georgia  Bank Financial Corporation (the "Company") may, from time-to-time, make
written  or  oral  forward-looking statements, including statements contained in
the  Company's  filings  with  the  Securities  and  Exchange  Commission  (the
"Commission")  and  its  reports  to  shareholders.  Statements  made  in  such
documents,  other  than  those  concerning  historical  information,  should  be
considered forward-looking and subject to various risks and uncertainties.  Such
forward-looking  statements  are  made based upon management's belief as well as
assumptions made by, and information currently available to, management pursuant
to  "safe  harbor" provisions of the Private Securities Litigation Reform Act of
1995.  The  Company's  actual  results  may  differ  materially from the results
anticipated in forward-looking statements due to a variety of factors, including
governmental  monetary  and  fiscal  policies, deposit levels, loan demand, loan
collateral  values,  securities  portfolio  values,  and  interest  rate  risk
management;  the  effects  of  competition  in  the  banking business from other
commercial  banks,  savings  and  loan  associations,  mortgage  banking  firms,
consumer finance companies, credit unions, securities brokerage firms, insurance
companies,  money  market  mutual  funds  and  other


                                       12
<PAGE>
financial  institutions  operating  in  the Company's market area and elsewhere,
including  institutions  operating through the Internet; changes in governmental
regulation  relating  to the banking industry, including regulations relating to
branching  and acquisitions; failure of assumptions underlying the establishment
of  reserves  for  loan  losses,  including  the  value of collateral underlying
delinquent loans, and other factors.  The Company cautions that such factors are
not  exclusive.  The  Company  does  not undertake to update any forward-looking
statement  that  may be made from time to time by, or on behalf of, the Company.

Critical  Accounting  Policies
------------------------------

The  accounting  and  financial  reporting  policies  of  the Company conform to
accounting  principles generally accepted in the United States of America and to
general  practices  within  the banking industry.  Of these policies, management
has  identified  the  allowance  for loan losses as a critical accounting policy
that requires difficult subjective judgment and is important to the presentation
of  the  financial  condition  and  results  of  operations  of  the  Company.

The allowance for loan losses is established through a provision for loan losses
charged  to  expense,  which  affects the Company's earnings directly. Loans are
charged  against the allowance for loan losses when management believes that the
collectibility  of the principal is unlikely. Subsequent recoveries are added to
the  allowance.  The  allowance  is  an  amount that management believes will be
adequate  to absorb losses on existing loans that become uncollectible, based on
evaluations  of  the  collectibility  of  loans.  The  evaluations  take  into
consideration  such  factors  as  changes  in  the nature and volume of the loan
portfolio,  historical loss rates, overall portfolio quality, review of specific
problem  loans,  and  current  economic  conditions and trends that may affect a
borrower's  ability  to  repay.

The Company segments its allowance for loan losses into the following four major
categories:  1)  identified  losses  for impaired loans; 2) general reserves for
Classified/Watch loans; 3) general reserves for loans with satisfactory ratings;
4) general reserves based on economic and market risk qualitative factors.  Risk
ratings are initially assigned in accordance with the Bank's loan and collection
policy.  An organizationally independent department reviews grade assignments on
an ongoing basis.  Management reviews current information and events regarding a
borrower's  financial  condition  and  strengths,  cash flows available for debt
repayment,  the  related collateral supporting the loan and the effects of known
and  expected  economic conditions.  When the evaluation reflects a greater than
normal  risk associated with the individual loan, management classifies the loan
accordingly.  If  the  loan is determined to be impaired, management allocates a
portion  of  the  allowance for loan losses for that loan based upon the present
value  of  future cash flows discounted at the loan's effective interest rate or
the  fair  value  of  the  collateral  as  the  measure  for  the  amount of the
impairment.  Cash  receipts  for  accruing  loans  are  applied to principal and
interest  under the contractual terms of the loan agreement, where cash receipts
on  impaired  and  nonaccrual  loans  for which the accrual of interest has been
discontinued  are  applied  first  to  principal  and  then  to interest income.
Impaired  and  Classified/Watch  loans are aggressively monitored.  The reserves
for  loans


                                       13
<PAGE>
rated satisfactory are further subdivided into various types of loans as defined
by  call  report codes.  Qualitative factors are based upon economic, market and
industry conditions that are specific to the Company's local two county markets.
These  qualitative  factors  include, but are not limited to, national and local
economic  conditions,  bankruptcy  trends,  unemployment  trends,  loan
concentrations,  dependency  upon  government  installations and facilities, and
competitive  factors in the local market.  These allocations for the qualitative
factors  are  included in the various individual components of the allowance for
loan  losses.  The  qualitative  factors  are  subjective  in nature and require
considerable  judgment  on the part of the Company's management.  However, it is
the  Company's  opinion that these factors represent uncertainties in the Bank's
business  environment  that  must be factored into the Company's analysis of the
allowance  for  loan  losses.  The  Company  is  committed  to  developing  more
historical  data  in  the  future  to reduce the dependence on these qualitative
factors.

Performance  Overview  --  Net  Income
--------------------------------------

The  Company's net income for the third quarter of 2004 was $2,322,000 which was
an  increase  of  $225,000  (10.8%) compared to net income of $2,097,000 for the
third  quarter of 2003.  Diluted net income per share for the three months ended
September  30,  2004  was  $0.44  compared  to  $0.39 for the three months ended
September 30, 2003. Net income for the first nine months of 2004 was $6,485,000,
an increase of $559,000 (9.4%) when compared to net income of $5,926,000 for the
first  nine  months  of  2003. The increase in net income for both the three and
nine  months  ended  September 30, 2004 compared to the same periods in 2003 was
primarily  a  result  of  increases  in  net  interest  income  and decreases in
noninterest  expense, somewhat offset by a decrease in gain on sales of loans in
the  secondary  market.  The  provision  for loan losses increased for the three
months  ended September 30, 2004 as compared to the three months ended September
30,  2003  due  to  a  decrease  in  substandard loans in the three months ended
September 30, 2003.  For the nine months ended September 30, 2004 as compared to
the  nine months ended September 30, 2003, there is a decrease in the provision,
primarily  due  to  the improvement in the levels of Classified Watch rated debt
during  the second quarter of 2004. Despite a lower interest rate environment in
2004,  loan  interest  income  increased  due to loan volume.  Additionally, the
lower rates, coupled with a decrease in the prime savings account rate, resulted
in  lower  interest  expense on deposits, despite the increase in deposit volume
for the nine month period ended September 30, 2004.  During the third quarter of
2004,  the increase in the volume and the interest rates resulted in an increase
in  deposit  expense.  Gain  on  sale  of mortgage loans in the secondary market
decreased  due  to  higher  mortgage  rates  in  2004  as compared to 2003 which
resulted  in  a decrease in refinancing activity in 2004.  This also resulted in
lower  mortgage  commissions.  The  increase  in  employee  benefit  expense  is
primarily  due to increases in deferred compensation expense, state unemployment
taxes,  and  medical  and dental insurance, somewhat offset by decreases in 401K
contributions.  Other  operating expenses increased primarily due to loan costs,
due  to  an  anticipated $150,000 loss on a fraudulent mortgage loan sold in the
secondary  market,  increased cash item losses, increased processing fees due to
new  retail  checking  accounts, software maintenance agreements, external audit
expense,  and  ATM  processing  fees  offset  by  increases  in  ATM


                                       14
<PAGE>
income  included  in  miscellaneous  income,  somewhat  offset  by a decrease in
overdraft  protection  expense  and  contributions.

Total  assets  of  $688.7  million at September 30, 2004 reflects an increase of
$54.0 million (9.4%) from year-end 2003. This increase is primarily attributable
to  higher  loan  and  investment  balances since December 2003.  Total loans at
September  30,  2004  were $472.3 million which represented an increase of $39.6
million  (9.1%)  from  December  31,  2003.  Since December 31, 2003, investment
securities  increased $13.3 million (8.5%), and premises and equipment increased
$4.1  million  (28.5%).  These  increases  were  funded  by  increases  in total
deposits  of $59.7 million (12.3%), increases in Federal Home Loan Bank advances
of  $10.0 million (33.3%), and net income of $6.5 million less dividends paid of
$2.0  million,  somewhat offset by decreases in securities sold under repurchase
agreements  of  $16.1  million  (28.2%).

The  annualized  return on average assets for the Company was 1.30% for the nine
months  ended  September  30,  2004,  compared to 1.33% for the same period last
year.  While total assets have increased $68.5 million since third quarter 2003,
net  income  has  only  increased  $559,000.  The  $2.3  million increase in net
interest  income  was  more  than offset by the $2.8 million decrease in gain on
sale  of mortgage loans.  However, other increases in noninterest income coupled
with  a decrease in noninterest expense resulted in the $559,000 increase to net
income.  The  annualized  return  on average stockholders' equity was 15.61% for
the  nine  months ended September 30, 2004 compared to 15.81% for the comparable
period  in  2003.  The  decrease  is  primarily  attributable  to  the continued
increase  in  stockholders'  equity.


Net  Interest  Income
---------------------

Net  interest  income  increased  $740,000  (12.7%) in the third quarter of 2004
compared  to the third quarter of 2003 and $2.3 million (13.6%) during the first
nine  months  of  2004  compared  to  the same period in 2003. Despite the lower
interest  rates,  interest  income  on  loans  increased $443,000 (6.7%) for the
three-month  period and $1.1 million (5.8%) for the nine-month period due to the
additional  volume.  Interest income on investment securities increased $358,000
(24.0%)  and  $595,000  (12.8%)  for  the  three  and  nine-month  periods ended
September  30,  2004,  respectively, compared to the same periods in 2003 due to
increased  volume.  Due  to  increased  volume,  interest  expense  on  deposits
increased  $69,000 (4.0%) for the three month period ended September 30, 2004 as
compared with the three month period ended September 30, 2003. Despite increases
in  deposit  volumes,  interest  expense  on  deposits decreased $537,000 (9.5%)
during  the  nine-month  period  ended  September  30, 2004 compared to the same
period  in  2003  due  to  lower  interest  rates  during  2004.

The  Company's  net  interest  margin for the three months and nine months ended
September  30,  2004  was  4.03%  and 4.01%, respectively, compared to 3.93% and
3.89%  for  the  three  and  nine months ended September 30, 2003, respectively.


                                       15
<PAGE>
Noninterest  Income
-------------------

Noninterest  income  decreased $986,000 (22.9%) for the three month period ended
September  30,  2004  as  compared to the three-month period ended September 30,
2003 and $2.0 million (17.7%) for the nine month period ended September 30, 2004
as compared to the nine-month period ended September 30, 2003.  The decrease for
both  periods  in  noninterest income was primarily attributable to decreases in
gain  on sales of mortgage loans in the secondary market of $1.4 million (48.9%)
for  the  third  quarter  2004  as compared with the third quarter 2004 and $2.8
million  (39.2%)  for  the nine months ended September 30, 2004 as compared with
the  nine  months ended September 2003.  These decreases are attributable to the
increase  in  the interest rates resulting in lower levels of home purchases and
refinancings.  Service  charges  and fees on deposits increased $193,000 (16.8%)
from  the  third  quarter  2003  and  $257,000 (7.6%) over the nine months ended
September  30,  2003,  primarily  due  to  increases in NSF fees and ATM income,
somewhat  offset by decreases in service charges, all a result of the new retail
checking  accounts.  Also,  lower commercial cash processing fees resulted in an
additional  reduction  to  service  charges.  Retail investment income increased
$92,000  (192.5%) over the third quarter 2003 and $123,000 (55.8%) over the nine
months  ended  September  30, 2003, due to increased volume.  Trust service fees
increased  $50,000 (51.1%) over the third quarter 2003 and $158,000 (64.0%) over
the  nine  months  ended September 30, 2004, also due to increased volume.  Cash
surrender value of bank owned life insurance increased $169,000 (83.5%) over the
nine  months  ended September 30, 2003, due to additional insurance purchases in
June  and  July  of  2003.  The  decrease  in  the  cash surrender value of life
insurance  of  $10,000 (8.1%) for the third quarter of 2004 as compared with the
third  quarter  of  2003,  is  due  to  lower  interest  rates.

Noninterest  Expense
--------------------

Noninterest  expense  for  the  three  months ended September 30, 2004 decreased
$826,000  (12.3%) as compared with the three months ended September 30, 2003 and
$303,000  (1.7%)  for  the nine months ended September 30, 2004 as compared with
the  nine  months  ended  September 30, 2003.  Salary expense decreased $847,000
(22.1%)  in  the third quarter of 2004 compared to the third quarter of 2003 and
decreased  $1.2  million  (12.3%)  for the nine month period ended September 30,
2004  when  compared to the nine months ended September 30, 2003.  The decreases
in  salary  expense for both the quarter and nine-month period are primarily the
result  of  decreased  mortgage commissions directly related to the reduction of
secondary  mortgage  market volume.  Employee benefits expense decreased $34,000
(4.72%)  over  the  third quarter of 2003 and increased $153,000 (7.5%) over the
first  nine  months  of  2003.  The decrease in the third quarter comparisons is
primarily  due  to  decreases in 401(K) expense, somewhat offset by increases in
long term compensation expense and medical and dental insurance. The increase in
the  nine  month  comparisons  is  primarily  due  to  increases  in  long  term
compensation  expense, state unemployment tax, and medical and dental insurance,
somewhat  offset  by  reductions  in  401(K) expense.  The increase in occupancy
expense  of  $53,000  (8.5%)  over the third quarter of 2003 and $136,000 (7.6%)
over  the  nine  month


                                       16
<PAGE>
ended  September  30,  2003,  is  primarily  due  to operation of the Walton Way
Operations  Campus  opened in February 2004, maintenance expenses related to the
Cotton  Exchange  branch  which  opened  in  September  2004, and property taxes
related  to these operations and additional real estate purchases.  The increase
in  other  operating  expenses  of  $614,000  (14.3%) over the nine months ended
September  30, 2003 is primarily due to increases due to the new retail checking
account  program,  an  anticipated  loss  on  a  fraudulent  mortgage  loan, ATM
processing  fees  due  to higher volume levels, software maintenance agreements,
external  audit  expenses, and cash item losses, somewhat offset by decreases in
overdraft  protection  expense  and  contributions.

Income  Taxes
-------------

Income  tax expense in the third quarter of 2004 totaled $1,139,000, an increase
of  $79,000  over the third quarter of 2003.  Income tax expense of $3.2 million
for  the  first  nine  months  of  2004 reflects an increase of $83,000 over the
comparable  nine  month  period  in  2003.  The  effective tax rate for the nine
months ended September 30, 2004 and 2003 was 32.9% and 34.4%, respectively.  The
decrease in the effective tax rate is primarily due to an increase in tax-exempt
income.

Asset  Quality
--------------

Table  1  shows  the  current and prior period amounts of non-performing assets.
Non-performing  assets were $2.7 million at September 30, 2004, compared to $3.1
million  at December 31, 2003 and $2.6 million at September 30, 2003.  The ratio
of  non-performing  assets  to  total  loans  and other real estate was 0.57% at
September  30,  2004,  compared  to  0.70%  at  December  31,  2003 and 0.63% at
September  30,  2003.  The  control  and  monitoring  of  non-performing  assets
continues  to  be  a  priority  of  management.

There  were  $8,000  of loans past due and still accruing at September 30, 2004.
There  were no loans past due 90 days or more and still accruing at December 31,
2003  and  September  30,  2003.

Allowance  for  Loan  Losses
----------------------------

The  allowance  for loan losses represents a reserve for probable loan losses in
the  loan portfolio.  The adequacy of the allowance for loan losses is evaluated
periodically  based  on  a  review  of  all  significant  loans, with particular
emphasis  on  impaired,  non-accruing, past due, and other loans that management
believes require special attention.  The determination of the allowance for loan
losses is considered a critical accounting policy of the Company.  See "Critical
Accounting  Policies."

When  reviewing  the allowance for loan losses, it is important to understand to
whom  the Company lends.  At September 30, 2004, the loan portfolio is comprised
of  78.28%  real  estate  loans,  of  which  23.25% constitutes construction and
acquisition and development loans.  Commercial, financial and agricultural loans
comprise  12.51%,  and  consumer  loans  comprise  9.21%  of  the  portfolio.


                                       17
<PAGE>
While the Company has 78.28% of its loan portfolio secured by real estate loans,
this  percentage is not significantly higher than in previous years.  Commercial
real  estate  comprises  31.94%  of  the  loan  portfolio and is primarily owner
occupied  properties  where  the operations of the commercial entity provide the
necessary cash flow to service the debt.  For this portion of real estate loans,
repayment  is  not  dependent upon liquidation of the real estate.  Construction
and  development (23.25%) has been an increasingly important portion of the real
estate  loan  portfolio.  The  Company  carefully  monitors  the  loans  in this
category  since  the  repayment  of  these loans is generally dependent upon the
liquidation  of  the  real estate and is impacted by national and local economic
conditions.  The residential category, 20.16% of the portfolio, represents those
loans  that the Company chooses to maintain in its portfolio rather than selling
into  the  secondary  market  for  marketing  and  competitive  reasons.  The
residential held for sale category, 2.93% of the portfolio, comprises loans that
are in the process of being sold into the secondary market.  The credit has been
approved  by  the  investor and the interest rate locked so the Company takes no
credit  or  interest  rate  risk  with  respect  to  these  loans.

The  Company  has  no  large  loan  concentrations  to  individual  borrowers or
industries.  Unsecured  loans  at  September  30,  2004 were $9.1 million. While
management  uses  available  information  to  recognize  losses on loans, future
additions  to  the  allowance  may  be  necessary  based  on changes in economic
conditions.  In  addition,  various  regulatory agencies, as an integral part of
their  examination process, periodically review the Company's allowance for loan
losses.  Such  agencies  may  require  the Company to recognize additions to the
allowance  based  on  their judgments about information available to them at the
time  of  their  examination.

Additions to the allowance for loan losses are made periodically to maintain the
allowance  at an appropriate level based upon management's analysis of potential
risk in the loan portfolio.  Loans determined to be uncollectible are charged to
the  allowance  for  loan  losses  and  subsequent  recoveries  are added to the
allowance.  A  provision  for  losses  in  the amount of $493,000 was charged to
expense  for  the  quarter ended September 30, 2004 compared to $219,000 for the
quarter  ended  September  30,  2003,  and  $1,013,000 for the nine months ended
September  30,  2004  compared  to $1,125,000 for the nine months ended June 30,
2003.  The  provision was higher for the three month ended September 30, 2004 as
compared  with  the  three  months ended September 30, 2003, due to reversals of
loan  loss  provision  in  September 2003 to reflect lower levels of substandard
loans and lower charge-offs.  Despite the increase in loan volume, the loan loss
provision  decreased  for  the  nine months ended September 30, 2004 as compared
with  the nine months ended September 30, 2003, due to improvement in the levels
of  Classified  Watch  rated  debt.

At  September 30, 2004 the ratio of allowance for loan losses to total loans was
1.61%  compared  to  1.69% at December 31, 2003 and 1.67% at September 30, 2003.
Management  considers  the  current  allowance for loan losses appropriate based
upon  its analysis of the potential risk in the portfolio, although there can be
no  assurance  that the assumptions underlying such analysis will continue to be
correct.


                                       18
<PAGE>
Liquidity  and  Capital  Resources
----------------------------------

The  Company's  liquidity  remains  adequate  to meet operating and loan funding
requirements.  The  loan  to  deposit  ratio  at  September  30,  2004 was 86.6%
compared  to  89.4%  at  December 31, 2003 and 87.0% at September 30, 2003.  The
decrease  in  the loan to deposit ratio from December 31, 2003 and September 30,
2003  reflects the significant increase in deposits during the first nine months
of  2004.   Deposits  at  September 30, 2004 and December 31, 2003 include $35.0
million  of  brokered  certificates  of  deposit.  The Company has also utilized
borrowings  from  the  Federal  Home Loan Bank.  The Company maintains a line of
credit  with  the  Federal  Home Loan Bank approximating 10% of the Bank's total
assets.  Federal  Home  Loan  Bank advances are collateralized by eligible first
mortgage  loans,  and  commercial  real  estate loans.  These borrowings totaled
$40.0  million at September 30, 2004.  The Company maintains repurchase lines of
credit  with  SunTrust  Robinson  Humphrey, Atlanta, Georgia, for advances up to
$20.0  million  and  with The Bankers Bank, Atlanta, Georgia, for advances up to
$10.0  million  of which no amounts were outstanding at September 30, 2004.  The
Company  has  a  federal  funds  purchased  accommodation with The Bankers Bank,
Atlanta,  Georgia,  for  advances  up  to  $16.3 million and with SunTrust Bank,
Atlanta,  Georgia  for  advances  up  to $10.0 million.  Additionally, liquidity
needs  can  be  satisfied  by  the  structuring  of the maturities of investment
securities  and  the  pricing  and  maturities  on loans and deposits offered to
customers.  The  Company  also  uses  customer  securities sold under repurchase
agreements  to  fund  growth.  Securities  sold under repurchase agreements were
$40.9  million  at  September  30,  2004.

Shareholders'  equity to total assets was 8.0% at September 30, 2004 compared to
8.3%  at  September  30,  2003 and 8.5% at December 31, 2003. The capital of the
Company  and  the  Bank exceeded all required regulatory guidelines at September
30,  2004.  The  Company's  Tier  1  risk-based,  total  risk-based and leverage
capital  ratios  were  10.44%, 11.69%, and 8.29%, respectively, at September 30,
2004.  Table  2  which follows reflects the current regulatory capital levels in
more  detail,  including  comparisons  to  the  regulatory  minimums.

Management  is  not  aware  of  any  events or uncertainties that are reasonably
likely  to  have a material effect on the Company's liquidity, capital resources
or  operations.

Commitments  and  Contractual  Obligations
------------------------------------------

The Bank is a party to lines of credit with off-balance sheet risk in the normal
course  of  business  to  meet  the  financing needs of its customers.  Lines of
credit are unfunded commitments to extend credit.  These instruments involve, in
varying  degrees,  exposure  to  credit  and interest rate risk in excess of the
amounts  recognized  in the financial statements.  The Bank's exposure to credit
loss  in  the  event  of  nonperformance  by  the  other  party to the financial
instrument  for  unfunded  commitments to extend credit and letters of credit is
represented  by the contractual amount of those instruments.  The Bank evaluates
construction  and acquisition and development loans for the percentage completed
before  extending  additional credit.  The Bank follows the same credit policies


                                       19
<PAGE>
in  making  commitments  and  contractual  obligations as it does for on-balance
sheet  instruments.

Unfunded commitments to extend credit where contract amounts represent potential
credit risk totaled $122.7 million at September 30, 2004.  These commitments are
primarily  at  variable  interest  rates.

The  Company's  commitments  are  funded  through  internal  funding  sources of
scheduled  repayments of loans and sales and maturities of investment securities
available  for  sale  or external funding sources through acceptance of deposits
from  customers  or  borrowings  from  other  financial  institutions.

The  following table is a summary of the Company's commitments to extend credit,
commitments  under  contractual  leases  as  well  as  the  Company' contractual
obligations,  consisting  of deposits, FHLB advances, which are subject to early
termination  options,  and  borrowed  funds by contractual maturity date for the
next  five  years.

<TABLE>
<CAPTION>
    Commitments and           Due in    Due in    Due in    Due in    Due in
Contractual Obligations       1 Year   2 Years   3 Years   4 Years   5 Years
---------------------------  --------  --------  --------  --------  --------
<S>                          <C>       <C>       <C>       <C>       <C>
Lines of credit              $122,691         -         -         -         -
Lease agreements                  138       122       113         5         -
Deposits                      234,524   117,058    77,794    33,607    31,515
Securities sold under
  repurchase agreements        40,909         -         -         -         -
FHLB advances                       -     5,000     5,000         -         -
Other borrowings                1,000         -         -         -         -
                             --------  --------  --------  --------  --------
  Total commitments and
    contractual obligations  $399,262  $122,180  $ 82,907  $ 33,612  $ 31,515
                             ========  ========  ========  ========  ========
</TABLE>

Although management regularly monitors the balance of outstanding commitments to
fund  loans  to  ensure  funding  availability should the need arise, management
believes  that  the  risk  of  all customers fully drawing on all these lines of
credit  at  the  same  time  is  remote.

Effects  of  Inflation  and  Changing  Prices
---------------------------------------------

Inflation  generally  increases  the cost of funds and operating overhead and to
the  extent  loans  and  other  assets  bear  variable rates, the yields on such
assets.  Unlike  most  industrial  companies,  virtually  all  of the assets and
liabilities  of  a  financial  institution are monetary in nature.  As a result,
interest  rates generally have a more significant impact on the performance of a
financial institution than the effects of general levels of inflation.  Although
interest  rates  do  not  necessarily move in the same direction and to the same
extent  as  the  prices  of goods and services, increases in inflation generally
have  resulted in increased interest rates.  In addition, inflation can increase
a  financial  institution's  cost  of  goods and services purchased, the cost of
salaries  and  benefits,  occupancy  expense  and  similar items.  Inflation and
related  increases  in  interest  rates  generally  decrease the market value of
investments  and  loans  held  and  may  adversely  affect  liquidity, earnings,


                                       20
<PAGE>
and stockholders' equity. Mortgage originations and refinancings tend to slow as
interest  rates  increase,  and  can  reduce  the  Company's  earnings from such
activities  and  the  income  from the sale of residential mortgage loans in the
secondary  market.


                                       21
<PAGE>
<TABLE>
<CAPTION>
TABLE 1
-------

                        GEORGIA BANK FINANCIAL CORPORATION AND SUBSIDIARY
                                  CONSOLIDATED FINANCIAL DATA
                                    (Dollars in Thousands)
                                        (Unaudited)

                                                        Nine Months Ended September 30
                                                        ------------------------------
PROFITABILITY                                              2004               2003
-------------                                              ----               ----
<S>                                                  <C>                   <C>

Return on average assets *                                1.30%                1.33%

Return on average equity *                               15.61%               15.81%

ALLOWANCE FOR LOAN LOSSES
-------------------------

Beginning balance, January 1                           $  7,278             $  6,534
Provision charged to expense                              1,013                1,125
Recoveries                                                  543                  462
Loans charged off                                        (1,248)              (1,147)
                                                     -----------           ----------
Ending balance, September 30                           $  7,586            $   6,974
                                                     ===========           =========-
</TABLE>

<TABLE>
<CAPTION>
NON-PERFORMING ASSETS        September 30, 2004    December 31, 2003    September 30, 2003
---------------------
<S>                          <C>                   <C>                  <C>
Non-accrual loans            $    2,623            $   3,045            $    2,631
Other real estate owned              58                    5                     0
                             ----------            ---------            ----------
Total non-performing assets  $    2,681            $   3,050            $    2,631
                             ==========            =========            ==========


LOANS PAST DUE 90 DAYS OR
MORE AND STILL ACCRUING      $        8            $       0            $        0
                             ==========            =========            ==========
</TABLE>

*  Annualized


                                       22
<PAGE>
<TABLE>
<CAPTION>
TABLE  2
--------

                                  Georgia Bank Financial Corporation
                                                  and
                                     Georgia Bank & Trust Company
                                    Regulatory Capital Requirements
                                          September 30, 2004
                                         (Dollars in Thousands)


                                          Actual            Required           Excess
                                     Amount    Percent   Amount  Percent   Amount  Percent
                                     ----------------    ---------------   ---------------
<S>                                  <C>      <C>        <C>     <C>       <C>     <C>
Georgia Bank Financial Corporation

Risk-based capital:
   Tier 1 capital                    $56,923     10.44%  21,820     4.00%  35,103     6.44%
   Total capital                      63,751     11.69%  43,639     8.00%  20,112     3.69%
Tier 1 leverage ratio                 56,923      8.29%  27,482     4.00%  29,441     4.29%


Georgia Bank & Trust Company
Risk-based capital:
   Tier 1 capital                    $53,854      9.90%  21,757     4.00%  32,097     5.90%
   Total capital                      60,663     11.15%  43,514     8.00%  17,149     3.15%
Tier 1 leverage ratio                 53,854      7.86%  27,424     4.00%  26,430     3.86%
</TABLE>


                                       23
<PAGE>
Item 3.  Quantitative  and  Qualitative  Disclosures  About  Market  Risk

As of September 30, 2004, there were no substantial changes in the interest rate
sensitivity  analysis or the sensitivity of market value of portfolio equity for
various  changes  in  interest  rates  calculated  as of December 31, 2003.  The
foregoing  disclosures  related to the market risk of the Company should be read
in  conjunction  with  the  Company's audited consolidated financial statements,
related  notes  and  management's discussion and analysis of financial condition
and  results  of operations for the year ended December 31, 2003 included in the
Company's  2003  Annual  Report  on  Form  10-K.

Item 4.  Controls  and  Procedures

As  of  the end of the period covered by this report, the Company carried out an
evaluation,  under  the  supervision and with the participation of the Company's
management,  including  the  Company's  President  and  Chief  Executive Officer
(principal  executive  officer)  and  its  Executive  Vice  President  and Chief
Operating  Officer  (principal  financial  officer), of the effectiveness of the
design  and  operation  of  the  Company's  disclosure  controls  and procedures
pursuant to Exchange Act Rule 13a-15.  Based upon that evaluation, such officers
concluded that the Company's disclosure controls and procedures are effective in
timely  alerting them to material information relating to the Company (including
its  consolidated subsidiaries) that is required to be included in the Company's
periodic  filings  with the Securities and Exchange Commission.  There have been
no  significant  changes in the Company's internal controls or, to the Company's
knowledge,  in  other  factors  that  could  significantly affect those internal
controls  subsequent  to  the  date  the Company carried out its evaluation, and
there  have  been no corrective actions with respect to significant deficiencies
or  material  weaknesses.


                                       24
<PAGE>
                                     Part II
                                OTHER INFORMATION


Item 1.   Legal  Proceedings

          There  are  no material pending legal proceedings to which the Company
          or  any  of  its  subsidiaries  is  a  party  or of which any of their
          property  is  subject.

Item 2.   Unregistered  Sales  of  Equity  Securities  and  Use  of  Proceeds

          Issuer  Purchases  of  Equity  Securities

          The  following  table  sets  forth information regarding the Company's
          purchases  of  its  common  stock  on a monthly basis during the third
          quarter  of  2004.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
                                            Total Number of        Maximum Number (or
                                            Shares (or Units   Appropriate Dollar Value)
                       Total     Average   Purchased as Part   of Shares (or Units) that
                     Number of    Price       of Publicly         May Yet Be Purchased
                      Shares    Paid Per   Announced Plans or      Under the Plans or
    Period           Purchased    Share        Programs 1               Programs
-------------------  ---------  ---------  ------------------  --------------------------
<S>                  <C>        <C>        <C>                 <C>

July 1 through July
31, 2004                   200  $   28.25                 200                      99,800
-------------------  ---------  ---------  ------------------  --------------------------
August 1 through
August 31, 2004              -          -                   -                           -
-------------------  ---------  ---------  ------------------  --------------------------
September 1
through September
30, 2004                 2,000      28.20               2,000                      97,800
-------------------  ---------  ---------  ------------------  --------------------------
Total                    2,200      28.20               2,200                      97,800
===================  =========  =========  ==================  ==========================
</TABLE>

          On  April  15, 2004, the Company announced the commencement of a stock
          repurchase  program,  pursuant  to  which  it will, from time to time,
          repurchase  up to 100,000 shares of its outstanding stock. The program
          does  not  have a stated expiration date. No stock repurchase programs
          were  terminated  during  the  third  quarter  of  2004.


Item 3.   Defaults  Upon  Senior  Securities

          Not  applicable

Item 4.   Submission  of  Matters  to  a  Vote  of  Security  Holders

          None


                                       25
<PAGE>
Item 5.   Other  Information

          None

Item 6.   Exhibits


               31.1 Certification of Chief Executive Officer Pursuant to Section
                    302  of  the  Sarbanes-Oxley  Act  of  2002.

               31.2 Certification of Chief Financial Officer Pursuant to Section
                    302  of  the  Sarbanes-Oxley  Act  of  2002.

               32.1 Certification of Chief Executive Officer and Chief Financial
                    Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of
                    2002.


                                       26
<PAGE>
                       GEORGIA BANK FINANCIAL CORPORATION
                              Form 10-Q Signatures


     Pursuant  to  the  requirements of the Securities Exchange Act of 1934, the
registrant  caused  this  report  to be signed on its behalf by the undersigned,
thereunto  duly  authorized.

                                     GEORGIA BANK FINANCIAL CORPORATION



Date: November 3, 2004               By: /s/ Ronald L. Thigpen
      ----------------                  -----------------------------------
                                     Ronald L. Thigpen
                                     Executive Vice President, Chief
                                     Operating Officer (Duly Authorized
                                     Officer of Registrant and Principal
                                     Financial Officer)


                                       27
<PAGE>